Texas will add 2 million barrels of oil per day in 2019 and more in 2020

Texas Permian oil producers will add three pipelines and 2 million barrels of oil a day.

A few months ago it was believed that U.S. oil production was going to plateau from mid-2018 to 2020. However, August saw the largest annual increase in U.S. oil production in 98 years, according to government data. The American energy industry added, in crude and other oil liquids, nearly 3 million barrels, roughly the equivalent of what Kuwait pumps, than it did in the same month in 2017. Total output of 15.9 million barrels a day was more than Russia or Saudi Arabia.

Bloomberg reports on the status of new oil pipelines and EIA oil production reports.

Rail Cars and Pipelines

The growth was possible because oil traders decided not to be stymied by the dearth of pipelines. They used rail cars and even trucks to ship barrels out of the region. Pipeline companies unexpectedly increased capacity, in part because they added chemicals known as drag reduction agents to increase flow. A new pipeline came online earlier than anticipated. Three more pipelines are expected between August and December in 2019. Texas Oil production is poised to soar.

Permian companies are drilling wells but are not completing them. These oil wells are becoming a reservoir of ready-to-tap production once the new Gray Oak, Cactus II and Epic pipelines come online.

By the end of 2019, total U.S. oil production — including so-called natural gas liquids used in the petrochemical industry — is expected to rise to 17.4 million barrels a day, according to the U.S. Energy Information Administration. At that level, American net imports of petroleum will fall in December 2019 to 320,000 barrels a day.

27 thoughts on “Texas will add 2 million barrels of oil per day in 2019 and more in 2020”

  1. Rule of law and property rights are the reasons why US hydrocarbon production is likely to increase for decades yet.

    If Africa, Brazil, Iraq, Iran, Russia, and the rest of the world ever shift away from corrupt despotism to rule of law and property rights, the price of oil would drop to $30 barrel and stay there indefinitely.

    Reply
  2. Production expansion will depend on economic conditions. Oil price, and interest rates for the most part. If you can predict those accurately, you can make a lot more money in the futures markets, and are wasting your time drilling for oil.

    Reply
  3. As Iran is being squeezed by sanctions and while Venezuela collapses, the US is well positioned to pick up some market share in a market where demand keeps growing.

    Reply
  4. Laying pipes is mostly cut and cover so there is no need for boring. Time for completion is mostly based on availability of skilled labor. A lot of the work can be done in parallel.

    Reply
  5. Increase production tends to lower the price which tend to lower production. Don’t be surprised if the prediction does not come thru.

    Reply
  6. Yeah basically. Kick Iran in the nethers while driving a V6. What an interesting future we live in.

    Better still have over 100 years of methane so that we can power our electric cars in a dozen years.

    Reply
  7. Maybe this is the new growth industry for the Boring company.

    (this isn’t a serious proposal, i’m quite sure you should never move millions of barrels of oil in his tunnels as they aren’t properly constructed and sealed for this purpose).

    Reply
  8. Simplifying greatly the shale oil story is:

    1. Federal deregulation
    2. Capital allocation
    3. Technological innovation
    4. Increased production
    5. Increased revenue
    6. goto 2:

    There is some missing stuff like the Republican Congress pushing the Obama administration hard to allow US oil sales overseas (this wasn’t allowed since the 70s). Technological innovation leads to improved efficiency and opens up new shale oil fields. Periodic oil price crashes cull the herd of overly leveraged and inefficient companies, etc.

    Reply
  9. One thing to remember is that more supply does not lower cost. Lower-cost supply lowers cost. Technology will bring down exploration and production costs over time, but the oil gets tougher to find and extract over time. All commodities are priced based on the labor it takes to turn it into a useful product and make a profit. In real terms, commodities have always gotten cheaper over time. Technology drives prices down, not supply.

    Reply
  10. Production expansion will depend on economic conditions. Oil price, and interest rates for the most part. If you can predict those accurately, you can make a lot more money in the futures markets, and are wasting your time drilling for oil.

    Reply
  11. Yeah basically. Kick Iran in the nethers while driving a V6. What an interesting future we live in.

    Better still have over 100 years of methane so that we can power our electric cars in a dozen years.

    Reply
  12. Maybe this is the new growth industry for the Boring company.

    (this isn’t a serious proposal, i’m quite sure you should never move millions of barrels of oil in his tunnels as they aren’t properly constructed and sealed for this purpose).

    Reply
  13. Simplifying greatly the shale oil story is:

    1. Federal deregulation
    2. Capital allocation
    3. Technological innovation
    4. Increased production
    5. Increased revenue
    6. goto 2:

    There is some missing stuff like the Republican Congress pushing the Obama administration hard to allow US oil sales overseas (this wasn’t allowed since the 70s). Technological innovation leads to improved efficiency and opens up new shale oil fields. Periodic oil price crashes cull the herd of overly leveraged and inefficient companies, etc.

    Reply
  14. One thing to remember is that more supply does not lower cost. Lower-cost supply lowers cost. Technology will bring down exploration and production costs over time, but the oil gets tougher to find and extract over time. All commodities are priced based on the labor it takes to turn it into a useful product and make a profit. In real terms, commodities have always gotten cheaper over time. Technology drives prices down, not supply.

    Reply

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